The changing face of leadership - small business management

Nation's Business, Jan, 1995 by Michael Barrier

In a small-business context, to speak of "leadership" can seem almost redundant because so many small-business owners identify so closely with their businesses. What can "leadership" mean when there is no one to lead, except maybe a few family members and a handful of employees who work so closely with you that they can almost read your mind?

As your business grows larger, though, things can start to get messy.

Growth usually brings more employees, who may see you seldom. If you remain self-contained and self-propelled, the risk of failure will rise, because so many of your wishes must now be carried out by people one or more reporting levels removed from you.

The traditional entrepreneurial response to this situation could be summed up this way: "Do it my way, or else!" In a great many small businesses, that attitude still prevails--but it is beginning to fade. "The old style of management, which would rule with fear and intimidation, is over," says Stuart R. Levine, chief executive of Dale Carnegie & Associates, Inc., the training company, based in Garden City, N.Y.

Today, Levine says, a leader should be defined not as someone who rules "with a bullwhip and a chair," but as "a person who can communicate and motivate." The co-author with Michael A. Crom of The Leader in You (Simon & Schuster), Levine will speak on leadership May 2 in one of the two-hour satellite seminars produced by the Quality Learning Services division of the U.S. Chamber of Commerce.

Many small-business owners have come to realize that the traditional leadership style is not simply arbitrary and disagreeable; it can also be dangerous to the company's survival. The boss who insists that orders be obeyed without question, and who suppresses any feedback from subordinates, can easily lead the organization over a cliff--because that boss may not have a clue about what's really going on.

The importance of feedback, San Diego psychologist John Eggers suggests, lies in this observation: "When we interpret human behavior, we're wrong 50 to 70 percent of the time." A lack of open communication between boss and employee thus can mean that both parties are misreading each other, with possibly lethal consequences for the business.

The challenge for the owner of a successful, growing small business, then, is to marshal leadership skills that have become critically important as the business has grown--even though those skills may have been of little consequence a few years or even months before, when the business was much smaller.

For many small businesses in their early stages, the leader's financial skills are far more important than leadership skills as they're usually defined. Likewise, the fledgling business owner cannot worry too much about motivating the employees (if there are any); the important thing is the business owner's own motivation. It's when a company is on its feet and growing that the other skills move to the top of the list.

To complicate matters, the need for those skills may not be readily apparent. Now that the business is established, its immediate survival is probably not riding on them--the way it depended on the owner's financial skills, say, in the business's earliest days. With the connection between particular skills and business survival no longer so obvious, an entrepreneur may be slow to change his or her leadership style.

For example, it took Keith Thorndyke a while to uncover a communication problem at Recyclights, a 28-employee, Minneapolis-based company that recycles fluorescent lights.

Thorndyke, chief executive officer of Recyclights, says he expects sales this fiscal year of $1.6 million or so, more than double last year's figure, and he is planning for expansion into other states. At first, communication was not a problem, he says, "because everybody knew what was going on and where we were going." But as the company grew and became more structured, "we ran into the bumps."

He thought empowering workers alone would be enough: "You give them a task and let them go." But, by soliciting feedback, he learned that his employees also wanted to help give shape to the corporate goals, instead of simply carrying out a plan handed down to them as a finished package.

Thorndyke says he now understands that "I need to communicate the strategic direction in little bits, more often. Not all at once in a big session, but by going around and talking with them, a little bit all the time."

The idea of taking such a bit-by-bit approach may inspire derision in some small-business owners; it may sound too small-scale for people with big dreams. But, in fact, some entrepreneurs suggest, a constant flow of communication can create bonds that make achieving the big dreams easier.

Communication "seems like such a minor thing," says Charles Barnard, the owner of Foot Traffic, a chain of eight specialty sock stores based in Kansas City, Mo. "But it's probably the major thing that you have to focus on." Foot Traffic has begun publishing a mail-order catalog that Barnard sees as a key to the company's future growth. And he thinks it's vital that he convey respect, even in seemingly small ways, for the contributions of the employees building that end of the business.